Nostalgia for Quiet Passions

Present-day capitalism has undergone a change
of emotions because of the crisis. Greed, a useful emotion for 17th century capitalism, capable of setting
limits to any self-destructive passions, is less and less able to exercise the
moderating function which it was assigned by classical liberalism and, amongst
other things, has turned expectation into a true economic driving force in
itself. In his article, Daniel Innerarity asks why this is
so and points out that the so-called global financial style of government would
have to mean somehow going back to the quiet emotions.

The
economic crisis has revealed a unique change of emotions in contemporary
capitalism. The function that liberalism assigned to passions and interest has
been modified. Seventeenth century capitalism saw greed as a useful passion
that could provide the strength both to maintain the will to win and to limit
the self-destructive passions. Economic self-interest would be a hybrid of
passion and reason, a mediator between greed and calculability. The idea of
turning private vices into public virtues, as expressed in Mandeville's Fable
of the Bees, is based on this economic usage of passions. Greed would become
socially useful because it maintains the will to win over and above the
comfortable satisfaction of material needs. When greed is linked to economic
self-interest and its potential to excite is limited, it finally becomes what
David Hume called a "quiet passion" with a clear economic and social use.

So then, do things really work
like that in the current finance-fixated economy? Is it maintained by the drive
of quiet passions that become generally useful or by a greed that is not so
much the property of individuals but part of the dynamics of the systems? Greed
is a driving force of the economy, but we also know that it can be an unlimited
desire whose pleasure is to be found not so much in the gratification as in the
expectation. What we are seeing is that in the present-day finance markets,
greed is less and less able to carry out that useful function that it was
assigned by classical liberalism and which has set expectations sky-high,
turning them into the real driving force of the economy. Why is this?

Financial markets have allowed
the expectation of greater and riskier profits to be continually stimulated.
The greater the willingness to run risks, the greater the possible profits and
the less sense of responsibility there is. This is true basically for deals
that take place in the financial arena, but it also occurs in the investment
departments of banks, which want to take on the same risks and obtain the same
profits. The banks can hardly set systemic limits within the financial markets
in such a way that they do not limit the increase in profits of speculative
investments.

Inasmuch as banks operate in the
business of credit, in the financing of companies or in the administration of
private holdings, what we have are economic activities which, in their
objective dimension, are connected with economic activities with aims and
objectives; in their timescale they extend over long periods and do not depend
on events or decisions; in their social dimension, such economic activities are
linked with long-lasting social relationships, which in turn are the basis of
stability and confidence.

However, everything is very
different when the main business of the banks consists of speculating in the
financial markets. In this case there is no investment, but only bets which are
not identified with the objects of the gamble and are nothing more than
self-reference. The speculator does not try to avoid those moments of
uncertainty which any investor with his own capital attempts to exclude as far
as possible. And he does not do it because those moments of uncertainty are
precisely what he wants to take advantage of with his economic gambles; he sees
them as the kind of excitement he would like to experience again and again.

The temporal dimensions of the
financial markets contribute to the continual emotional turbulence that results
from the rapid sequence of expectation and disappointment, euphoria and
depression, greed and fear. The extremely short time-line during which brokers
and investment managers act, excites the expectation of greater profits in
shorter and shorter periods of time.

The rhythms of the financial
markets, with extremely short cadences, lead to a widespread mistrust in the
ability to control the future, the excessive exploitation of the present, the
economisation of the smallest units of time and, finally, ruinous competition
around the "last minute", which gives the decisive advantage to those who
compete for the greatest profits. The greed of the investment banks is not a
quality that is derived from people but rather a structural principle of their
behaviour. Greed necessarily accompanies a type of competition in which the
criterion of always taking advantage of the opportunity of even better results
rules. In this way, a few months before the crisis broke, we were in a
situation similar to that of a race with cars heading full-speed towards a
wall, in which the winner is the one who brakes last. Since no one is prepared
to put their brakes on because the next car
will brake a little later, they eventually all smash into the wall. The
risk of harmful passions is clear in this collective onward rush, which is both
imitative and stupid.

In the financial crisis of 2008,
the belief that risks could be calculated, insured and sold on to others
incited dealers to take on even more risks. At the same time, various bodies
contributed to creating the illusion that things were under control: the
mathematics of finance considered that risks were calculable and the dominating
economic science stated, via the "theory of effective markets", that it was
able to demonstrate the complete rationality of price setting in the financial
markets. The alleged protection against risks that these bodies and mechanisms
promised institutionalised in the financial markets the potential of gaining
even more, which is common in all kinds of greed.

Certain procedures have been set
up over financial markets and within
banks, which act in exactly the opposite way to that of the neutralisation of
harmful passions, as sought by classical liberalism. If the calculation of
economic interests turns out to be an illusion, then there can be no mediation
between passion and reason in financial markets. Greed cannot become a quiet passion
until the potential for the excitement of fancy
finance by investment banks and derivative products, until the profession
of banker is once again - as Paul Krugman recommended - a boring matter.
Capitalism cannot renounce its ambition to earn more, which is as old as money
itself, but we should be able to reduce the gratification which greed is
awarded in the financial markets of this emotional capitalism. The function of
what we call global financial governance would have to be a kind of return to the
quiet emotions, to those that are missed in the current financial whirlwind of
destructive passions.